In an era of PR that has seen so much change, a persistent and entrenched facet is the billable hour. While client service has changed dramatically from a focus on media relations to the PESO model, and where PR pros have had to move from their roles as behind-the-scenes wordsmiths to active participants on social media, an overwhelming portion of the industry still relies on the same “pay for time” model that it has used for decades. Is it time to move away from this method?
At least one PR professional is publicly calling for the end of this particular standard. Graham Goodkind, founder and Chairman of Frank PR, recently spoke at the Global ICCO PR Summit about timesheets, arguing that they are not a particularly effective method of billing clients.
Timesheets, or tracking billable hours, are probably the most used method of charging PR clients worldwide, but there are problems with them.
Charging clients by the hour means that when a client approaches a firm with an issue or campaign, the PR firm has to estimate how long the program will take, who from the firm will be working on the program (since hourly rates are typically tied directly to an associate’s experience level), and then manage the program effectively to match (or come close to) the agreed-to budget. Things can go south quickly in a variety of ways. For example, if a problem arises that requires more senior-level PR involvement, budget can get used up quite fast.
The reverse presents a problem of a different sort—if for some reason the team assembled is crackerjack and able to finish the work more quickly than was anticipated, the client is happy…but the firm ends up with less revenue than was originally estimated. Not the end of the world, but it can wreak havoc on projections even if it happens infrequently.
Budgets can also be exceeded for other reasons, such as misunderstanding the scope of the project or other challenges that can be as varied as the clients themselves. In these cases, the firm is left with choosing one of two unattractive options: either writing off the extra time for a loss, or going back to the client for additional budget.
The arguments Goodkind makes for ditching timesheets/billable hours are logical ones. He cites a survey he conducted that found that a very high percentage of respondents said that they had filled out timesheets in a manner that likely had compromised accuracy, such as entering time retroactively. He notes that PR firms need to look at what they are selling—are they selling time spent, or are they selling output? If a client comes to a firm asking them to solve a problem, is the solution less valuable to the client if it takes 30 minutes to solve versus five hours? No, of course it isn’t less valuable. But if you’re charging by the hour, that’s the message that is being sent.
When asked how he would suggest firms move toward a different model of charging, Goodkind notes that PR firms will need to make the culture change in how they view what they are doing first—“be obsessed with the output, not the time put in.”
Virtually every other aspect of the business of public relations has been disrupted. Is the billable hour next?